Verizon Wireless agreed Thursday to buy Alltel Corp. in a $28.1 billion deal that would make Verizon by far the largest cellular carrier in the United States.
Verizon Wireless agrees to buy Alltel
The deal would affect the southern one-third of Minnesota, where Alltel is a significant cellular carrier.
By STAFF AND WIRE REPORTS
June 6, 2008 at 4:46AM
The value of the deal includes $5.9 million in cash and $22.2 billion in assumed debt that would be taken on by Verizon, the companies said.
The deal also will have a big impact on Minnesota, where Alltel is a significant cellular carrier in the southern one-third of the state as a result of its 2005 acquisition of Midwest Wireless of Mankato.
The deal comes just seven months after Alltel was taken private by TPG Capital and a unit of Goldman Sachs Group. They paid $24.7 billion for the stock and took on $2.7 billion in debt, bringing the value of that deal to $27.4 billion.
Alltel has 13.2 million subscribers in 34 states, mainly in rural areas away from the coasts. Added to Verizon Wireless' 67.2 million subscribers, the combined company would surpass the current U.S. cellular leader, AT&T Inc., with 71.4 million subscribers.
The parties expect the deal to close by the end of the year, pending regulatory approvals. The deal is likely to face scrutiny by the Department of Justice and the Federal Trade Commission, but analysts expect it to pass.
However, Verizon Wireless could have to divest some wireless operations in southern Minnesota because it would own overlapping wireless service licenses.
The overlapping licenses are a result of the cellular industry's consolidation. When Alltel acquired Midwest Wireless in 2006, the two firms had overlapping wireless licenses in south-central and southwestern Minnesota. As a result, federal regulators forced Alltel to divest part of its holdings in that area. Alltel sold its previous cellular licenses in southern Minnesota to Rural Cellular Corp. of Alexandria, Minn., then continued to serve southern Minnesota under the Midwest Wireless licenses as a competitor of Rural Cellular.
But last year, Rural Cellular agreed to be acquired by Verizon in a deal that's still waiting for federal regulatory approvals. If Verizon owns both Alltel and Rural Cellular, it would own overlapping cellular licenses in much of southern Minnesota.
Verizon doesn't disclose how many subscribers it has in Minnesota, and Alltel officials couldn't be reached Thursday for comment.
The Associated Press and staff writer Steve Alexander contributed to this report.
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STAFF AND WIRE REPORTS
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